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MLGW News Release
 
Comments made by MLGW President & CEO Jerry Collins at the TVA's Board Meeting
August 20, 2008
Good morning. My name is Jerry Collins and I am the President and CEO of Memphis Light, Gas and Water Division. As you know, MLGW is TVA's largest customer. We send TVA almost $1 billion dollars annually for power costs, and that number is growing at an alarming rate. I am here today to voice my concerns regarding the possible TVA rate increase actions that may become effective as soon as October.

We were surprised to learn about possible base rate increases within just the last few days. In fact, this was discussed with the distributor group as a whole only last Thursday, and now today the Board is set to take action. I am concerned about the haste with which this is proceeding. We have not had adequate time to examine TVAís proposal in detail and to engage TVA in discussion on possible alternatives to the rate increase. More time for proper deliberation is needed.

I am also deeply concerned about the cumulative impacts of the price increases over the past couple of years on our customers. As you are well aware, TVA has already taken significant rate increase actions over the past three years, including the institution of the fuel cost adjustor. These rate actions have increased an average residential electric bill by 48% in just three years. Our typical residential electric bill has increased by over $43 per month, a compound annual growth of almost 14%.

Power costs make up about 80% of the retail customerís ultimate bill, with MLGW distribution costs making up the balance. Over the same three-year period, MLGW has made substantial efforts to control our portion of the bill. We have thoroughly examined our operations to reduce costs and eliminate entitlements. As a result, we were able to lower bills 3.1% for 2008 based on MLGW cost reductions. However, the customers have not perceived these savings due to the dramatic rise in fuel cost, along with TVA base rate increases. I urge TVA to earnestly reexamine its operations to determine what costs can be reduced without unduly impacting service.

Our customers labor under the strain of rising energy costs. The Shelby County poverty rate is 39% higher than the national average. These cost levels mean that many of our citizens, particularly the elderly and disabled, are often forced to choose between paying for food and medicine or utilities. The impact of rising costs also shows up in our bad debt, doubling in less than three years. MLGW bears the burden of increased bad debt caused by rising wholesale prices, not TVA.

I am not sure how much more our customers can bear. That is why I am here to appeal to the Board to:

  • First, delay the proposed base rate increase until alternatives can be properly evaluated and deliberated with the distributor community.

  • Second, thoroughly examine TVAís cost structure to ferret out cost savings opportunities, and

  • Third, TVA should continue to evaluate how capital funds can be used to invest in demand-side initiatives that can reduce the need for additional generation assets, reduce greenhouse gas emissions, and perhaps most importantly, lower our customersí bills.

    Thank you for the opportunity to address the Board on this vital issue.

    Jerry Collins
    President and CEO
    Memphis Light, Gas, and Water Division